HPH Trust rejects offer to buy port asset, announces Q3 profit

THE manager of Hutchison Port Holdings Trust on Friday declined an offer to acquire one port asset after the business trust announced a net profit for its third quarter.

The trustee manager said it has rejected an offer from Hutchison Port Holdings (HPH), the operator of the trust's port assets, to acquire a 70 per cent stake in Shantou International Container Terminals (SICT). HPH has been obliged under the terms of an agreement entered with HPHT to grant the trust the first right of refusal for its stake in SICT.

The trustee-manager said that taking into account the keen competition in the area, the acquisition of SICT does not meet its investment criteria for HPHT.

This came on the back of a smaller third-quarter profit announced for the trust compared to the last fiscal year. HPHT posted a Q3 net profit of HK$239.5 million (S$42.3 million), down 11.4 per cent from the year-ago period.

Earnings per unit for Q3 was 2.75 HK cents, lower compared to 3.10 HK cents for Q3 FY17.

Revenue for the three months ended Sept 30 was down 6.1 per cent at HK$3.03 billion on a 16.7 per cent decrease in throughput at its port assets, primarily due to lower transshipment cargoes.

Operating costs were mostly flat compared to the last fiscal year.

But other operating income quadrupled to HK$17.5 million due to timing difference on 2018 dividend income from River Ports Economic Benefits.

Other operating expenses however went up by 2.2 per cent to HK$139.7 million. Consequently, operating profit was 8.9 per cent lower at HK$1.05 billion.

For the nine months ended Sept 30, net profit fell 21.4 per cent to HK$554.9 million.

The trustee-manager warned of headwinds spilling over to the fourth quarter and possibly 2019. It pointed to escalating trade tensions between the US and China, which it said are expected to adversely impact the trust's performance. But the severity and timing of this geopolitical development on the trust's business cannot be readily quantified except as the events unfold, it added.

It said that it will continue to exercise strict financial discipline to safeguard HPHT's assets.

HPHT closed 2 per cent higher at US$0.24 on Friday.